Monetary Integration in East Asia: An Empirical Approach

José Brandão de Brito ()
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José Brandão de Brito: Banco de Portugal and Technical University of Lisbon, Postal: Research Department, Rua Francisco Ribeiro 2, 1150 Lisbon, Portugal.

Journal of Economic Integration, 2004, vol. 19, 536-567

Abstract: This paper investigates empirically the economic feasibility of monetary integration in East Asia. A structural VAR model is employed to decompose real output, real exchange rate and price level into a lagged polynomial of supply, demand and monetary shocks. The shocks are identified through the imposition of long-run restrictions, which are extracted from a version of Clarida and Gali’s (1994) model extended in this paper to encompass the Balassa-Samuelson-effect. Once identified, the shocks are used to construct indicators relevant to monetary integration. Using the Euro-11 countries as benchmark, the overall results suggest that East Asian countries fulfil reasonably well the criteria looked at.

Keywords: Monetary integration; East Asia; optimum currency area; Balassa-Samuelson effect; structural VAR; long run identifying assumptions (search for similar items in EconPapers)
JEL-codes: C32 F15 F40 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0298

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